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Health In 2 Point 00

Why Medicare Is the Solution — Not the Problem

Not only is Social Security on the chopping block in order to respond to Republican extortion. So is Medicare.

But Medicare isn’t the nation’s budgetary problems. It’s the solution. The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles.

Medicare offers a means of reducing these costs — if Washington would let it.

Let me explain.

Americans spend more on health care per person than any other advanced nation and get less for our money. Yearly public and private healthcare spending is $7,538 per person. That’s almost two and a half times the average of other advanced nations.

Yet the typical American lives 77.9 years – less than the average 79.4 years in other advanced nations. And we have the highest rate of infant mortality of all advanced nations.

Medical costs are soaring because our health-care system is totally screwed up. Doctors and hospitals have every incentive to spend on unnecessary tests, drugs, and procedures.

You have lower back pain? Almost 95% of such cases are best relieved through physical therapy. But doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. Why? There’s not much money in physical therapy.

Your diabetes, asthma, or heart condition is acting up? If you go to the hospital, 20 percent of the time you’re back there within a month. You wouldn’t be nearly as likely to return if a nurse visited you at home to make sure you were taking your medications. This is common practice in other advanced countries. So why don’t nurses do home visits to Americans with acute conditions? Hospitals aren’t paid for it.

America spends $30 billion a year fixing medical errors – the worst rate among advanced countries. Why? Among other reasons because we keep patient records on computers that can’t share the data. Patient records are continuously re-written on pieces of paper, and then re-entered into different computers. That spells error.

Meanwhile, administrative costs eat up 15 to 30 percent of all healthcare spending in the United States. That’s twice the rate of most other advanced nations. Where does this money go? Mainly into collecting money: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Trying to slow the rise in Medicare costs doesn’t deal with any of this. It will just limit the amounts seniors can spend, which means less care. As a practical matter it means more political battles, as seniors – whose clout will grow as boomers are added to the ranks – demand the limits be increased. (If you thought the demagoguery over “death panels” was bad, you ain’t seen nothin’ yet.)

Paul Ryan’s plan – to give seniors vouchers they can cash in with private for-profit insurers — would be even worse. It would funnel money into the hands of for-profit insurers, whose administrative costs are far higher than Medicare.

So what’s the answer? For starters, allow anyone at any age to join Medicare. Medicare’s administrative costs are in the range of 3 percent. That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

In addition, allow Medicare – and its poor cousin Medicaid – to use their huge bargaining leverage to negotiate lower rates with hospitals, doctors, and pharmaceutical companies. This would help move health care from a fee-for-the-most-costly-service system into one designed to get the highest-quality outcomes most cheaply.

Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.

Let me say it again: Medicare isn’t the problem. It’s the solution.

[This is drawn from a post I did in April, also before current imboglio]

Robert Reich served as the 22nd United States Secretary of Labor under President William Jefferson Clinton from 1992 to 1997. He shares many of his thoughts and columns at Robert Reich, where this post first appeared.

Very Informative. Looking forward to reading more.
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8 years ago

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Barry Carol

Peter and Nate –

I don’t think Greece is a relevant comparison for anything we are discussing. According to a colleague who is married to a Greek and travels there with some regularity to visit family, the Greek economy consists mainly of a large government sector, agriculture and tourism. The remaining private sector is tiny and tax evasion is an art form. Moreover, according to my colleague, if things go wrong economically in Italy, Portugal, Spain or Ireland, they will say “we screwed up.” In Greece, by contrast, it’s never their fault.

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8 years ago

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Dr. Mike

At least here patients don’t have to bribe the doctors like they do in Japan and eastern Europe At least here patients don’t have to wait up to a year to get a CABG like they do in Canada where the father of one of my physician friends nearly died waiting for his. At least here if you have cancer on your colonoscopy you get surgery in less than a couple of weeks, unlike Australia where my mother in law just died because it took them 6 months. Oh and the bronchoscopy missed the biopsy of the 7cm pulmonary lesion… Read more »

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8 years ago

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steve

We really should not resort to anecdotal evidence. There are plenty of horror stories about US care. If you want some, I have plenty.

Steve

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8 years ago

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Barry Carol

“OECD statistics show that when you look at “whites only” the U.S. ranks 19th among 28 OECD countries for maternal mortality. How do you explain this?” Maggie – I think the most likely answer is the greater incidence of poverty in the U.S. Just because a woman is white doesn’t mean she’s rich or middle class. As you well know, there are plenty of poor white people in America. As I understand it, the TANF segment of Medicaid pays for 40% of all births in the U.S. Presumably, a significant percentage of those are to white women. Even if a… Read more »

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8 years ago

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Peter

Maggie,

The only reason you are upset with this blog is because people call you out. You come across as a know it all every time you speak. No one likes a know it all. Go back to your own blog, please.

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8 years ago

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Peter

“In Greece they pay a very high % of a very small amount and thus all the cheating” Yea, it’s onerous(that’s sarcasm), especially given the social services they get(got), especially pensions and health care. “The Greek public sector spends about EUR13 billion on health each year, or 5.8% of gross domestic product. If private health expenditure is also counted then the amount jumps to EUR25 billion,(10% GDP)” said Dimitris Maroulis, senior economist at Alpha Bank. http://www.worldwide-tax.com/greece/greece_tax.asp “Tax evasion, endemic among Greece’s wealthy middle classes, meant that the Government’s tax revenues were not coming in fast enough to fund its outgoings.”… Read more »

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8 years ago

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Nate Ogden

this whole greece tax thing got me thinking, how can people claim US spends twice as much on healthcare if you can’t even measure GDP accurately? If people are paying doctors under the table and doctors aren’t reporting the income then all those % of GDP numbers are meaningless. Came across this interesting tidbit reseraching; “According to estimates provided by experts of the European Healthcare Fraud and Corruption Network, between three and ten percent of the healthcare budgets throughout Europe are lost because of fraud and corruption. This translates into billions of Euro in Germany”“, says Anke Martiny, member of… Read more »

Nate , Margalit and everyone Nate: We’re not simply talking about infant mortality. We are talking about maternal mortality as well. OECD statistics show that when you look at “whites only” the U.S. ranks 19th among 28 OECD countries for maternal mortality. How do you explain this? We are also talking about life expectancy for all adults. When you look at life expectancy from brith white women in the U.S. rank 23rd, when compared to women in 28 other countries, white men rank 19th. (28th represents the lowest life expectancy. 1st represents the longest life expectancy.) As Dr. Steven Schroeder,… Read more »

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8 years ago

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Nate Ogden

“OECD statistics show that when you look at “whites only” the U.S. ranks 19th among 28 OECD countries for maternal mortality. How do you explain this?” Different record keeping? More single moms giving birth alone? http://www.turner-white.com/pdf/hp_jan01_fetal.pdf “Yet a general underreporting of deaths and lack of consensus about how to define maternal mortality hinder efforts to understand and address this topic of growing import.” “Other major institutional groups and investigative panels have proposed further refinements. Moreover, many countries interpret the classification schemes differently, an inconsistency that complicates data collection and interpretation even more.” According to this study White women don’t rank… Read more »

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8 years ago

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Nate Ogden

We’re not simply talking about infant mortality. We are talking about maternal mortality as well. OECD statistics show that when you look at “whites only” the U.S. ranks 19th among 28 OECD countries for maternal mortality. How do you explain this? http://www.medicalnewstoday.com/releases/80743.php A rise in the number of caesarean sections — which now account for 29% of all births — could be a factor in the increased maternal mortality rate, some experts said. According to a review of maternal deaths in New York, excessive bleeding is one of the primary causes of pregnancy-related death, and women who have undergone several… Read more »

I read Reinhart and Rogoff’s book on vacation. Greece has been in default about half of the last 150 years. This is a chronic problem for this country. It is the result of bad government, not left or right wing government. (While the US does not default, we lead the world in the frequency of banking crises.)

Steve

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8 years ago

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Nate Ogden

” It is the result of bad government, not left or right wing government.” I would disagree, this is clearly a problem with socialism. A far right limited government that only provided national defence, legal system, and trade law could never develope such a problem. Governments fail, the more you trust the government to do the larger the failure. If you rely on government for everything you end up with a mess like this. The left in America is demnading we implement greece of 10-20 years ago ignoring the result, Greece 2011. When ObamaCare kicks in and our debt skyrockets… Read more »

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8 years ago

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steve

You have just created a utopian right wing government, but that is not really how governments anywhere function or have functioned. Bad right wing governments become authoritarian just like bad left wing governments. They spend too much on defense or interfere too much with business. They create police states and pick winners and losers in their economies. An ideal right wing government will not default, but neither will an ideal left wing government.

OTOH, banking crises are inimical to all governments, but trend to be more frequent amongst freer market economies.

Steve

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8 years ago

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Nate Ogden

how does a government that doesn’t exist equate to a right wing government? Lets use barber licensure for example, if one is not required then the government is picking winners how? Trade law would be to set rules betweent he states not to get all up in business owners neather regions for every little thing

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8 years ago

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Nate Ogden

maybe you can have your wife explain this to you Peter but more important then the amount is the rate or %. Ideally you would pay a very small percent of a very large amount in taxes. In Greece they pay a very high % of a very small amount and thus all the cheating

Nate, by your definition the Greek economy should be thriving given the amount of tax they pay. Republicans should be envious of the Greek capacity to avoid taxes.

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8 years ago

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Nate Ogden

Peter do you even desire to say something useful even once in your life or do you relish your roll as a byte waster? It wouldn’t be so annoying if you were at least good at it. But you can’t even read and build a sliver of truth into your comments to make them funny. If you really want to play another round of point out how stupid Peter is then fine lets play; “Greek economy should be thriving given the amount of tax they pay.” Based on what Peter, no where in the article does it say how much… Read more »

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8 years ago

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tim

Nate, When you argue with Mr. Reich, you are “angry, angry, angry”. When you agree with him, you are “informed” and “reasonable”. This is just name calling. This, from the people who decided that conservatives suffer from “epistemic closure”. In actual sophisticated circles, ad hominem arguments are a sign of intellectual breakdown. Both sides of the political debate have their echo chambers. By the way, I’m one of those MBA practice managers, and I can tell you that the laws of economics have not been repealed in medical billing, any more than they have anywhere else. To talk about the… Read more »

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8 years ago

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Nate Ogden

Thanks for the perspective Tim, it sounds like pratice management is like healthcare, 20% of the population responds to tight managment like Kaiser, apparently those people are more comfortable having Medicare tell them exactly how to do everything and 80% prefer some choice and control in life

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8 years ago

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Nate Ogden

I was trying to solve some questions in my head last night with little success. Are we trying to design a healthcare system sustainable in the broad meaning, measured by the life of mankind, or a system sustainable for the life of our government? A universal healthcare system could work if you were only trying to design a system to last as long as the government that supports it. Governments tend to have a short life span so all the flaws inherent in them die when the government collapses. Only a truly free market healthcare system can survive during and… Read more »

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8 years ago

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steve

Except that there is no functional free market health care model anywhere in the world. Get some of your red states to try it out for us.

Steve

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8 years ago

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Nate Ogden

define functional for me and get your blue states to stop dictating failure to us and we would be happy to.

Its been a year since your God Obama and his blue state duddies got all up in our semi free market and told us what sort of plan we had to sell, who we had to cover, how to charge for it and everything else.

There is no functional social healthcare system in the world either

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8 years ago

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Barry Carol

Maggie – I think you know the data as well as anyone. As Steve Schroeder noted in his Shattuck Lecture a few years ago, health outcomes are determined 40% by personal behavior, 30% by genetics, 20% by environmental factors and socioeconomic status and only 10% by the quality of healthcare one has access to. Even if you compare white Americans with whites in other developed countries, this doesn’t change. Diets vary widely even within the U.S. – ore fried food (and more obesity) in the South, for example. Many more people in some European cities ride bikes to work. We… Read more »

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8 years ago

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Nate Ogden

“You cannot cite these relatively poor U.S. rankings and imply that it’s due mainly to inadequacies in our healthcare system despite the enormous amount of money we spend on healthcare.”

Why does this standard not apply to education? We spend more then every other or almost every other nation on education and have terrible results but are told the solution is we need to spend more.

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8 years ago

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steve

Not so big a difference when you look at teacher pay as a percentage of GDP per capita.

numbers don’t add up “American teachers spend on average 1,080 hours teaching each year.” Average school year is little under 180 days and 6.7 hours for total time in school of 1206 hours. Teachers don’t teach a full day and also get vacation, I don’t see any way they can be close to 1080 hours. Looking online I see a ton of CBAs that only require 5 50 minute classes and schools trying to get 6 classes out of them. 6 50 min classes is 5 hours times 180 days is 900, and that would mean no vacation. “The average… Read more »

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8 years ago

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steve

“This number looks like salary ignoring all benefits. Throw in benefits and 70K plus is the right number”

This is a comparison with other OECD countries. They all get benefits there which at least equal those of American teachers. Probably better since education is free in some of those countries. What this shows is that other countries pay their teachers better than we do when you adjust for the relative wealth of the countries.

““American teachers spend on average 1,080 hours teaching each year.”

I assume they include prep time.

Steve

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8 years ago

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Nate Ogden

I can’t think of single OECD country that offers health insurance any where close to the average teacher plan. Remember our poor rankings in comparisons are from government plans driving up cost and poor and uninsured not having coverage. All the way on the other end of the spectrum are the cadilliac plans and teachers are at the top of the list.

On infant mortality from Wikipedia. http://en.wikipedia.org/wiki/Infant_mortality#Comparing_infant_mortality_rates “UNICEF uses a statistical methodology to account for reporting differences among countries: “UNICEF compiles infant mortality country estimates derived from all sources and methods of estimation obtained either from standard reports, direct estimation from micro data sets, or from UNICEF’s yearly exercise. In order to sort out differences between estimates produced from different sources, with different methods, UNICEF developed, in coordination with WHO, the WB and UNSD, an estimation methodology that minimizes the errors embodied in each estimate and harmonize trends along time. Since the estimates are not necessarily the exact values used as… Read more »

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8 years ago

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Nate Ogden

Maggie; “That no one else bothered to intrude on this thread’s group fantasy (promoted by a “group” of roughly 2 1/2 people) simply demonstrates that informed readers no longer take THCB seriously.” 7 people clearly said Mr. Reich’s arguments will disproven and outdated propoganda. A couple of whom fall on the left side of the spectrum, what do they call this in DC, a bipartisian debunking of Mr. Reich. What does it mean to be informed? Someone who agrees with you and Mr. Reich’s erronous statements is informed and anyone that disagrees is angry? “The very best posts and threads… Read more »

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